The Covid-19 pandemic battered the share prices of many top industries, especially aerospace. There was a sharp decline in airline passengers, resulting in many aviation companies filing for bankruptcy. However, the development of a vaccine had a positive impact on world markets and drove a recovery in almost all major financial markets including the aerospace industry. Investors flocked to beaten-down sectors such as aerospace since these stocks were available at bargain prices, and they may still represent good value going forward.
We have handpicked the best aerospace shares, and in this guide, we tell you what they are.
Where Can I Buy Aerospace Shares?
Aerospace shares are listed on stock exchanges, and brokerages offer them to clients to trade. It’s best to buy and sell aerospace stocks via a regulated broker rather than on an unregulated platform. However, it can be hard to find the best broker for you, so we’ve come up with a list of candidate brokers based on their regulatory status, fees, and unique features.
Overview of the Aerospace Companies
The vast aerospace industry comprises many constituents, including auxiliary equipment manufacturing, commercial aircraft, helicopters, rocket engines, turbines, commercial gliders, and more. Many large defence companies account for a big share of this market because governments assign billions to defense spending and developing their air force capabilities. The aerospace industry is also driven by demand for business and leisure travel, which was massively impacted by the coronavirus pandemic of 2020-21.
If you believe that the worst of the pandemic is behind us and that aerospace companies are positioned well to continue their recoveries, you will find plenty of listed stocks to choose from.
What Are the Trading Hours for Aerospace Shares?
You can trade aerospace stocks on the exchanges where they are listed. The exchanges are usually open from Monday till Friday 9.30 am to 4 pm Eastern Time (and at similar local times in other countries such as the UK).
The initial one or two hours see a lot of volatility because big institutions are busy opening and closing their positions. At lunchtime, the volatility dies down as traders go for a break. Then, the last two hours see a bit of movement as day traders close their positions to avoid holding risk on their portfolios. Trading during pre and post-market sessions is also available but is limited to expert traders.
How to Trade and Invest in Aerospace Shares?
Open a Trading Account
The first step is to select a suitable broker platform on which to trade, which means one that is regulated (among other things). You will need to provide your name, email address, home address, and any required identification documentation. In many cases, you can open a brokerage account within minutes.
Choose Aerospace Shares
When choosing potentially undervalued shares to hold for the medium to long term, it is important to perform fundamental analysis — looks at things like earnings — to determine the true intrinsic value of the candidate stocks. Since aerospace stocks could stage their recoveries at different rates, think about diversifying across several such stocks rather than investing in a single stock.
Place Your Trade
If you’re buying aerospace stocks based on the fact that they’re still undervalued in the post-pandemic period, you don’t need to worry too much about timing your purchase exactly by conducting technical analysis, so it should simply be a matter of entering your investment size (as a monetary amount or number of shares) and pressing the “buy” button.
Top 10 Aerospace Shares to Buy
We have selected the top ten aerospace shares to buy in 2021 based on various fundamental factors such as earnings, prospects, and reserves. It also hasn’t escaped our notice that the price charts for many of these stocks show beaten-down or steadily recovering share prices.
Here are our top ten aerospace stocks:
- Boeing (BA)
- Lockheed Martin (LMT)
- General Dynamics (GD)
- Northrop Grumman (NOC)
- Raytheon Technologies (RTN)
- Maxar Technologies (MAXR)
- HEICO (HEI)
- Leidos (LDOS)
- Huntington Ingalls Industries (HII)
- Cubic (CUB)
Boeing is one of America’s biggest multinational corporations involved in the manufacturing of aerospace products. It has always been popular among investors due to its order history, and its top planes — such as the Boeing 737 — were a big part of its success. This stock’s share price saw its fair share of volatility from 2016 until the start of the pandemic in 2020. After hitting a low point in March 2020, Boeing shares have enjoyed an uptrend comprising a series of higher highs and higher lows.
Lockheed Martin (LMT)
This American multinational defense and aerospace company, with headquarters in Washington DC, was founded in 1995. It has a market cap of 94.41 billion dollars (at the time of writing) and is among the world’s largest defense contractors. After hitting a low point in March 2020, Lockheed shares had recovered about two-thirds of their losses by May 2021 but there is no definitive uptrend.
General Dynamics (GD)
General Dynamics is a $45.5 billion company at the time of writing. Another company that hit a low share price in March 2020, this one had recovered all of that share price fall by May 2021, to take it back to where it was before the pandemic happened.
Northrop Grumman (NOC)
Northrop is listed on the New York Stock Exchange (NYSE). At the time of writing, its market cap is 49.81 billion dollars and its total revenue is 37 billion dollars. The company is one of the fastest-growing defense stocks, and its share price shot up between March and May 2021.
Raytheon Technologies (RTN)
Founded in 1922, Raytheon technologies is one of the oldest aerospace companies in the United States. This defense contractor has a market cap of 109.85 billion dollars at the time of writing. Having fallen far in March 2020, Raytheon shares have since started to recover but still appear to be undervalued as of May 2021.
Expert Tip on Investing in Aerospace Shares“ When trading shares of aerospace companies, it’s best to choose solid stocks that have stood the test of time. During the coronavirus pandemic, many aerospace industry shares became worthless, but the ones that remain could be good bets on a continued recovery. ”- Shams Ul Zoha
Why Invest in Aerospace Shares?
As already hinted, aerospace stocks were beaten down badly during the coronavirus pandemic, but the ones that didn’t go bust have started to recover and may not have reached their full value yet. As travel restrictions are eased, airlines will need their fleets of aircraft repaired and replaced, so aerospace companies could enjoy increased demand. But it's not all about business and leisure travel, so don’t forget that aerospace companies also do big business in the defence sector.
Frequently Asked Questions
Most regulated brokers will require you to provide some identification documentation before investing in any stocks (not just aerospace companies). However, opening a broker account online can often be done in minutes.
The aerospace industry is still recovering from the slump in demand due to the coronavirus pandemic, and many of the aerospace companies’ stocks could still be undervalued. Rather than being quick wins, it could be best to buy and hold these stocks for the medium to long term.
The best way to manage your portfolio risk is to diversify by buying several stocks within (and outside) the aerospace industry.
Most countries require you to pay capital gains tax or income tax on the money you make from investments unless these investments are held within a tax-efficient trading account such as (in the UK) a Stocks & Shares ISA.
Aerospace stocks may be popular with traders and investors because they are still undervalued (relative to their future prospects) as a result of the coronavirus pandemic. They should continue to recover as travel restrictions are eased.
The regulatory authorities in each country, such as the Financial Conduct Authority (FCA) in the UK, usually let you search their lists of regulated brokers and other financial companies.